Federal Reserve Chair Jerome Powell indicated on Tuesday that the U.S. central bank will maintain its patient stance regarding interest rate cuts despite increasing pressure from President Donald Trump to implement quick policy changes.
At a central banking conference in Portugal Powell declared that the Fed plans to observe economic tariff effects before taking any action. The remarks emerged after Trump handed Powell a handwritten note requesting rate reductions because other central banks had implemented such cuts.
The Federal Reserve bases all its decisions on inflation control and employment goals according to Powell who stated that political influence does not affect their decisions. The international community of central bankers including ECB and Bank of England officials reacted positively to Powell’s statements which demonstrated their support for central bank independence.
The majority of Federal Reserve officials believe that interest rate reductions will occur based on upcoming inflation and labor market data. The Federal Reserve will convene its next policy meeting from July 29 to July 30 and the upcoming employment report on Thursday will determine market expectations.
The possibility of Trump announcing Powell’s replacement during the second half of 2025 has raised questions about the Federal Reserve’s independence as political and economic challenges intensify.
